Oil prices surged on Sunday after Iran threatened to close the Strait of Hormuz indefinitely following an ultimatum from US President Donald Trump.
The ongoing war in Iran has disrupted global oil supplies, pushing crude prices higher and increasing fuel costs. Geopolitical analysts warn that oil prices could remain high for years as markets struggle to recover.
Brent crude, the global oil benchmark, climbed 1.69% to about Sh14,831 per barrel at the open, while US crude rose 2% to approximately Sh13,038 per barrel.
The latest price increase follows escalating tensions between the United States and Iran, with the war in Iran now entering its fourth week.
The conflict has already caused major disruptions to global oil supplies, largely due to the effective closure of the Strait of Hormuz, which is considered the world’s busiest oil-shipping channel.
President Trump said the United States would “obliterate” Iran’s power plants if the Strait of Hormuz was not reopened by Monday evening.
Iran responded by saying that if the United States carried out the threat, it would completely close the Strait of Hormuz and would not reopen it until any destroyed power plants were rebuilt.
Iran also warned that it would target US and Israeli energy and communications infrastructure in the region if the conflict escalated further, raising fears of a broader regional conflict that could further disrupt global energy supplies.
The rising oil prices are already affecting fuel prices, particularly in the United States, where consumers are paying more at the pump.
The average price of a gallon of fuel reached about Sh512 on Sunday, up nearly Sh130 since the start of the war. Analysts warned that fuel prices could continue rising.
GasBuddy petroleum analyst Patrick De Haan said fuel prices would take time to recover even after the war ends.
“It’s going to be a snail’s pace for as long as this continues to stretch out, because it will take much more time for markets to globally mend,” he said.
The rising energy prices are also affecting financial markets, with stock futures declining at the open on Sunday.
Dow futures dropped 0.6%, or 237 points, while S&P 500 futures fell 0.6% and Nasdaq futures dropped 0.8%, reflecting investor concerns about the economic impact of the conflict and rising oil prices.
US Treasury Secretary Scott Bessent said Americans would choose “temporary elevated prices” if it meant long-term peace in the Middle East, suggesting the United States government was prepared for economic pressure in the short term.
The Strait of Hormuz is a critical global trade route through which a large portion of the world’s oil supply passes.
Any prolonged closure of the strait could significantly disrupt global energy markets, increase fuel prices worldwide and slow economic growth in many countries.
Energy analysts say the longer the conflict continues, the greater the risk of long-term oil supply shortages and sustained high fuel prices globally.
Markets are also concerned that attacks on energy infrastructure in the Middle East could further reduce oil production and exports.
With the war continuing and threats escalating between Iran and the United States, global markets remain volatile, and oil prices are expected to remain high in the short term as traders react to the uncertainty surrounding oil supply routes and geopolitical tensions in the region.
